27, February 2013

EUR/USD (a 4-hour chart)

EUR/USD (a 4-hour chart)

General overview

EUR/USD fell after the election results in Italy. Unfavorable news from Italy and the fact that the price was closed below 1.3100 might lead to an even deeper fall.

The situation has not changed much since Tuesday in the market. The pair was moving in the southern direction the whole day. The pair is again in a flat. The Euro stopped near the level 1.3055 at the end of Tuesday.

We have a strong sell signal as the Chinkou Span is below the price and the price is below the Ichimoku cloud.

If the price consolidates on 1.3055, the downtrend will continue. The first goal will be the level 1.3000. If the pair consolidates below this level, the downward movement will continue to the support level 1.2940.

The downward movement will be relevant as long as the price is below the Kijun-Sen (1.3167). Once the price consolidates above this level, the downward movement will be called into question, perhaps start a correction.

The Chinkou Span is lower than the price. That's a strong signal to sell.

Bollinger Bands indicator suggests continuation of the downward movement.

MACD is also at the bottom. If MACD turns up that will be a signal of a possible correction.

Trading recommendations

Now it is the best to open short positions, the first target is 1.3000. If the price is able to overcome this level, it will go to 1.2940.

Stop Loss is advised to place above the Kijun-sen 1.3167.

Do not forget to take into account the fundamental data, in addition to the technical picture to open orders.